Last week we started discussing the top 10 most common mistakes business-owners make when initiating a handoff to the next generation. This week we continue with the second half of the list.
Feelings may or may not be hurt when you decide who will be best for the takeover of your company. There’s a reason there are so many warnings against mixing family with business. Last week we reminded you to be sure to fill the roles based on individual skill, not politics. So your oldest isn’t the best leader but he’s great with accounting. Put him in charge of the books but expect that he may not take that news so well.
6. Not working together
Once you choose your successor, they should be in on molding the future of the business as soon as possible. If you have to rework your business plan for a change in market, increase in sales or even just to accommodate a new manager, bring them in on it so you can work together. Not only will it will make the transition go more smoothly, it will give you the chance to pass on your well-earned wisdom.
7. Not working out financial details
Will your family buy you out of the business? Will you stay on as a silent partner? Are you going to continue making decisions or leave them in charge completely? Do you have your legal papers and taxes in order for new ownership? These are very important things to get settled before anybody goes anywhere.
8. Only considering family
You may want to keep your business in the family for the long-haul but consider the possibility of introducing someone with more experience. If your familial successor hasn’t been shadowing your day-to-day business functions for a long enough time, they could find themselves in over their head once the hand-off is made. If no one is truly ready for the responsibility, the business may not be around for the long-haul. If you bring in a professional manager to lead, the family can still run the lower-level functions, and your business not only stays afloat, it stays in the family.
9. Not filling in your customers and vendors
Small businesses generally have great relationships with their customers and work closely with suppliers. If a big change is about to occur and your customers need to get used to working with someone new to fill their consumer needs they should know about it beforehand. This includes introducing your successor to them so they can begin to develop a relationship while you’re still around.
10. Not fully letting go
You built your business from the ground up – no one blames you for being attached. But if you’ve made the choice to move on and let the kids pick up the slack, you need to let them. There’s nothing more stressful on family or business when there’s leadership ambiguity, and with you sticking around hovering over your newly appointed manager, you will create stress and confusion. Mentally and emotionally prepare to walk away when the time comes.
Think you’re ready to start preparing your business for the next generation? Start now and remember these steps as you embark upon your new journey.
If you’re a late-life entrepreneur seeking support in business planning as you prepare for retirement, Prime Strategies can offer the necessary guidance and expertise to help you reach your goals.